The Berkshire Empire: Hidden Truth of Buffett and Munger's Success | 2023 Documentary

after winning a hostile takeover battle against Berkshire Hathaway Buffett now fully controls the textile company but he quickly realizes that he has made a grave mistake part of the partnership was buying what looked like sheep stocks Berkshire Hathaway looked like a cheap stock it wasn't a very it was a terrible business the textile industry is headed towards an inevitable decline Buffett's ownership of the company is bound to be worthless unless he can find someone else to buy it he turns to his trusted friend Charlie Munger for help offering to sell him Brusha Hathaway Pennies on a dollar bemonger declines his offer instead he shows Buffett another way out he presents a new company to Buffett one that has the potential to change berkshire's fortunes the company is called Blue Chip Stamps Blue Chip stands sell stamps at a discount to store owners and marketplaces these dams are then given to customers as Rewards since customers collect stamps to redeem for rewards at a later time Blue Chip stems holds on to a substantial amount of cash known as float for Buffett and Monger having access to the float will be advantageous Blue Chip stems is kind of like an insurance company having a large amount of cash can potentially give Buffett and manga the opportunity to invest the funds and other companies Buffett among keep buying their shares of boot chip stems until they have full control of the company [Music] with his investment in Blue Chip stands Warren Buffett has extended a Lifeline to Berkshire Hathaway but it's not nearly enough to truly say Berkshire Hathaway Buffett knows he must take decisive actions he knows you'll be a daunting task something he can do if he's under constant pressure from the partners of his fund then Warren Buffett does the unthinkable in order to free himself to pursue his vision for Berkshire Hathaway he shuts down his investment partnership [Music] for over a decade Warren Buffett has amassed a Fortune for his Investment Partners achieving a remarkable annualized return of 23 percent over 13 years and from the dissolution of his partnership Buffett finds himself with a staggering 16 million dollars in cash it's a type of money he will use to rebuild Berkshire Hathaway determined to not only say Berkshire Hathaway but to transform it into an Empire Buffett goes all in investing the majority of his net worth into the company that will become his legacy it's a gamble that would define his career and reshape the world of Finance forever it's really remarkable because Buffett was again going against what Ben Graham has taught in which was to avoid taking on too much risk but I think what he was really doing was betting on himself he has similar to confidence in his own ability to turn Berkshire Hathaway into a major success that he was willing to put all of his money into the company although it was facing bankruptcy [Music] thank you [Applause] thank you to say Berkshire Warren is pinning his hopes on cash flow generating companies like Blue Chip Stamps but in spite of his seemingly infallible plan Buffett and monger's investment in Blue Chips is also turning into a catastrophe Blue Chip stems is accused of occluding with other stamp companies to stifle competition and impose unjust restrictions on Merchants the Supreme Court rules against them allowing private parties to sue for Anti-Trust violations Blue Chip stands now faces a decline in profit margins it's a threat to their competitive advantage for Monger who's managing a fund for his Partners the fate of his career rests on the success of Blue Chip stands in a desperate attempt to make out for the potential losses monger and Buffett are on a hunt for another company to acquire one that has stable earnings that can provide a cushion for Blue Chip stands declining business and it turns out a small candy store located out in Los Angeles may just be the solution to their problems [Music] in 1971 Sea's candies is the most popular store in West Coast so basically Buffett and Monger were looking for companies with enduring competitive Advantage they call it a moat and they found what they're looking for in See's Candies if you've got a economic Castle people are going to come to want to take that castle away from you and you better have a strong boat you better have a night in a castle that knows what he's doing with his unwavering popularity See's Candies boasts a consistent stream of earnings [Music] recognizing the potential for stability among volatility Warren Buffett and Charlie Monger seized the opportunity to acquire See's Candies with a cash from Blue Chip Stamps and to make sure Sees Candy success continues Buffett and Monger become personally invested in the business taking Hands-On approach to his operations they go so far as to launch a legal defense against competitors seeking to copy the candy store's success [Music] the acquisition of See's Candies proved to be a Monumental success propelling a business to thrive for the next 60 years generating billions in profit but by the mid-1970s Buffett and monger's firms are still barely surviving but they have found a way to keep their companies afloat by acquiring other cash flow generating companies Buffett and Monger love insurance companies because they generate stable cash flows that can be used to invest in other companies and soon they began looking for a different kind of company but has the same business model in 1973 monger and buffer discovered Westco Financial a Savings and Loans holding company in Pasadena California but a bidding war ensues pitting them against Financial cooperation of Santa Barbara a company with greater resources despite the challenge Buffett persuades the owner to sell Wesco to him and monger the announcement causes Wesco stock to plummet from 16 to 11 per share presenting an opportunity for profit instead of taking advantage of the situation Buffett and Monger decide to purchase the stocks at 17 per share for going five dollar per share of potential profit due to their sense of integrity now with blue chip stands owning over half of West Coast Financial Monger assumes the position of chairman for the newly acquired company the future of Berkshire is finally looking up as buff as ownership of numerous cash generating businesses mitigates the impact of a declining textile industry ironically by trying to save both of their firms they stumbled upon at a very ingenious business model this model involves purchasing companies with a lot of cash reserves or floats and then utilizing the funds to purchase other companies the Buffett and monger's victory is short lasted their unique approach to business attracts the attention of the SEC and a tough prosecutor who's ready to come after everything Buffett and longer own [Music] the stock market toppled to new lows for the year again yesterday that concluded one of the most adverse weeks in Wall Street history the Dow Jones Industrial Average plunged 15. 57 points to 922. 19 after the market crash Brookshire's stock drops in half during a bear Market the SEC tends to face a lot of pressure to calm the Public's frustration and they tend to increase their efforts in Prosecuting companies and individuals and formidable up-and-comer in the SEC is on his way to becoming one of the toughest prosecutors in the government Stanley sporkin has been looking into Buffett and monger's takeover of Westco Financial sporkin could not understand why Buffett and Monger would overpay for a deal when there's a clear opportunity to make a profit spoken with a king eye for deception suspects that Buffett and Monger have constructed a complex web of Acquisitions and business dealings to conceal their illegal activities for Buffett and Monger who value their reputation more than anything else the potential of getting indicted is their worst nightmare [Music] in the end the very thing they're afraid to lose ends up becoming the thing that saves them Buffett and Monger have cultivated an impeccable reputation among their business associates meeting many of them to come to their defense in fact many individuals have come so far as to contact Stanley sporkin to vouch for Buffett and monger and plead with him to not indict them ultimately the substantial support extended by the colleagues and Associates of Buffett and Monger successfully persuaded the SEC to abstain from pressing charges against them their reputation is intact and their business is back to usual Buffett evades catastrophe with his reputation intact for years he has been steadily acquired newspaper companies including the Washington Post but now more than ever he's convinced of the long-term value of owning media companies he's ready to go back Buffett really like media companies I think it's because he understands the power and influence of media in a groundbreaking move Buffett acquires Buffalo Evening News for a record-breaking 35 million dollars a daily newspaper tailored to conservative readers but Buffett doesn't stop there he realizes the complexity of his investment deals has gotten him into trouble time has come to consolidate businesses after years of struggling to revitalize the textile Department Buffett makes a decision that is all but inevitable he shuts down all textile mills and to further streamline the business buffing and Monger merged Berkshire Hathaway with blue chip stands and employing Monger as Vice chairman and finally the new Berkshire Hathaway is born step by step but we've created something that kind of when I grabbed we might create over time but it took a lot of time to do it never seemed like we were making that progress much progress on only one day but compound interest works and with a dawn of a new decade Buffett and Monger cemented their partnership and discovered a business model that will Propel their snowball to epic proportions securing their legacy for decades to come in the 1980s the U.

S economy reaches unprecedented Heights and Warren Buffett's business is no exception through strategic Acquisitions of firms like the Furniture Mart and ABC News Buffet has elevated his business to new levels as a result Berkshire Hathaway stock has soared to two thousand dollars per share making Buffett a billionaire Warren Buffett of Omaha Nebraska if you would put ten thousand dollars in 1965 into his company Berkshire Hathaway you would have one million today in general Buffett's investment strategy is very event driven he typically invests in a company when there was a catalyst like a lawsuit or a takeover however the 80s is also characterized by culture of a corporate Raiders and a junk bond financing despite this environment Buffett manages to avoid getting caught up in The Fray whenever he engages in takeover deals he always appears as the White Knight the wine companies turn to for help in fending off hostile takeovers [Music] but despite his soaring net worth and fame buffer struggles to find attractive Investments all things being equal a high level of optimism will cause things to be priced High relative to their fair value or what we call the intrinsic value so we have to figure out the intrinsic value but clearly in a period of great optimism regarding the future prices will tend to be high relative to the intrinsic value and I'd like to buy when the price is below the intrinsic value and sell when it's above under the pressure to outperform but if it does the unthinkable he invests in a Wall Street firm the Solomon Brothers [Music] many years back when Warren Buffett was trying to turn around Geico Sullivan Brothers was the only Wall Street firm willing to underride bonds for the company so Buffett thought to himself this could be a good company to invest in Solomon Brothers started as a bond Trader in 1910 and came to prominence during the Roaring Twenties in 1985 The Firm made a profit of 500 million dollars establishing his position as one of wall Street's most profitable companies Warren Buffett sees Solomon Brothers as a great business with an excellent management team in place despite this he believes the company is overvalued for the Oracle of Omaha still manages to find a way to profit from the situation he presents Solomon with a proposal if they want his money they must create a security for him that guarantees a 15 return you see what he did there Buffett was leveraging his brand in exchange for riskless profit he was almost acting like DJ Khaled you can use my name before a fee for Solomon Brothers having Buffett as an investor is a huge boost of confidence for the company's doc they managed to create a preferred stock that is designed specifically for him this security would generate 15 return for Buffett in the long run but with an unlimited upside should Solomon stocks soar and Buffett buys 700 million dollars of them I would like to say that Berkshire Hathaway was a large customer of Solomon long before we bought the preferred and that we've had marvelous service over the years I think Solomon's going to be around for a long time so in this scenario the only risk Warren Buffett has is that Solomon Brothers goes bankrupt but that event is just virtually impossible right [Music] good evening the stock market today crashed the Dow Jones Industrials every other major index breaking records in its uh plummet downward on October 19 1987 the world Watchers in shock as the stock market crashed in what became known as Black Monday with billions of dollars evaporated Buffett watches as Solomon Brothers begins to crumble for the first time he started to worry that a bankruptcy of Solomon is becoming likely but the crash also presents an opportunity for Buffett to invest in a company that he has been watching for a while Coca-Cola for many many months we were buying as much Coca-Cola as we could buy roughly a third of the volume trading every day for months we were very aggressive in buying into Coca-Cola Buffet's name and Status also allowed him to buy Coca-Cola without disclosing it to anyone for more than a year because SEC given special privilege to withhold that information Warren Buffett continues to leverage his unique brand to get special deals from companies such as Gillette that he obtained a nine percent preferred stock as the shears the Solomon Brothers make a remarkable recovery following the Black Monday Warren Buffett thinks the worst is behind him little does he know the storm is far from over Nightly News good evening it is the kind of Scandal that rocks Wall Street and raises questions questions about the Integrity of our financial institutions for the giant Securities firm of Solomon Brothers under investigation for improper trading of Treasury bonds ultimately like many other Wall Street firms Solomon Brothers was like a casino it had one of the largest Bond training departments in the world but that department was known for its aggressive trading strategies and risk-taking appetite when bone Trader Paul Moser is found to have manipulated a treasury auction to make a huge profit Selman Brothers reputation is severely damaged in finance losing reputation means losing confidence within weeks the company is on the verge of bankruptcy Solomon Brothers is under investigation by the treasury Department the Federal Reserve the SEC and the justice department but more important than the fate of the firm itself is the impact their actions could have on the public trust and on The credibility of the American Market worldwide and a CEO is desperate to restore the Public's Trust here's hoping there's one man that can help boost the confidence of the market and if he says Solomon Brothers is fine maybe other investors will follow Buffett is called upon to save Solomon Brothers but instead of engaging an illegal battle Buffett takes a completely different approach he turns Solomon Brothers Inside Out making the company completely transparent to the lawmakers and giving prosecutors access to any and all documents I would do whatever was needed dig out any bit of information about what's happened in the past and we do everything I could to make sure that things exactly right in the future this move is designed to show the public and the government that Solomon Brothers has learned from its mistakes and will be an honest institution going forward Buffett knows this may be the only way to prevent Solomon Brothers from going bankrupt but it's more important that he preserves his own reputation and to do that he needs to be on the side of the people fighting corporate greed buffest crusade to eradicate any bad apples in the company results in Solomon Brothers being reduced in size and many employees lose their jobs and more importantly Buffett's investment in Solomon Brothers remains intact so the treasury modified its order and in effect of course it was quite an endorsement it was huge Buffett has turned a pretty nasty situation to his favor he was able to use the opportunity to reinforce the image that he is the conscience of American Finance with the salvation of Solomon Brothers Buffett's business sword making him the richest man in America and with that momentum he buys the rest of Geico as insurance companies continue to be his biggest cash cows after all buffa's number one role is to never lose money and the 700 million dollar bet is a quarter of Berkshire Hathaway's entire portfolio at the time but we'll see that Buffett learns a valuable lesson one still serving him well in 2023 as we're grappled with mass layoffs inflation and now backgrounds unsurprisingly Warren Buffett maintains a cautious approach holding a sizable 130 billion dollars of cash almost 20 percent of his total assets now from Buffett to retail investors all seek to safeguard and expand their wealth leading top financial institutions like Goldman Sachs to invest billions in real assets and recommend them to their key clients in fact in 2022 amid the stock market's worst year since 2008 won Real SS prices surged by 29 on average according to barons that asset Museum quality multi-million dollar fine art that's why since 2021 I have been investing with a company called Masterworks that offers investment in art from Legends like Picasso and Banksy while previously only accessible to high net worth individuals Masterworks manages everything from Acquisitions to sale and they've already exited 11 paintings all of them for a profit in fact their last three exits returned net profits of 10 13 and 35 percent directly to investors like us with the Contemporary Arts low correlation to stocks and attractive historical appreciation I'm happy that I've been invested with Metalworks and with my link in the description you can skip the waitlist and join me [Applause] fueled by technological innovation and globalization the mid-1990s in America were a time of a great economic growth for the newly crowned America's richest man it's not necessarily good news an overheated stock market means fewer investment opportunities but Buffett ultimately succumbed to the pressure and temptation to invest he acquires a giant insurance company called generally for 22 billion dollars hey pay for it using Berkshire Hathaway stock is something Buffett has never done before in my experience most deals where Equity is offered as the primary source of consideration seller accepts that because they believe that there's significant upside to that Equity acquire insists on that because they think the marketplace is probably overvaluing the equity buying something with stocks could be interpreted that Warren Buffett thought Berkshire Hathaway was too inflated but buying the company during the height of the duck and bubble is going to be a mistake the Buffett comes to regret [Music] stocks ended mixed as Coca-Cola joined the list of companies warning that profits would not meet forecasts earnings growth expectations have just been too high said Robert Natali a portfolio manager at Bear Stern's Asset Management Inc a Mystic turmoil of a scandal that sent Coca-Cola shares plummeting Warren buff has recently acquired Company general Reed also faces a disaster of his own in 1999 the company was defrauded out of a staggering 275 million dollars jeopardizing Buffett's investment and threatening to undermine his reputation as one of the world's most successful investors as the boat Market charges ahead producing Newt millionaires at a Breakneck Pace Warren Buffett's legendary investment record appears increasingly ordinary to make matters worse buff his personal life takes a dark turn in early 2000s Buffett finds a tumor in his colon and is hospitalized for surgery while Buffett recovers from the surgery the stock market takes a nosedive and the duck and bubble finally bursts they are already calling Black Friday it was the worst single day point loss ever for both exchanges after the. com bubble Buffer's reputation revives he's not ready to re-enter the game and start scouting for companies selling at a discount but there's a problem less than two years after the. com bubble another major disaster hits American Finance industry 911 was particularly bad for Warren Buffett because guess what he owned a lot of insurance companies that had to pay billions in Damages everyone the Aztec Phil 47 today it was another volatile day with huge price swings for the Blue Chips as investors pondered the implications of President Bush's address to the nation last night the 9 11 attacks shook the economy but Buffett is determined to make a comeback he sees an opportunity to buy companies at a steep discount including the McLean company and Business Wire as Buffett's Investment Portfolio begins to bounce back by 2005.

Buffett is back on the top of the business world again it's a status he's achieved through years of business Acquisitions and brand building and soon his name and his brand will be used to save Wall Street yet again from an impending Financial catastrophe the most expensive stock in the United States passed an unusual Plateau yesterday as the price for a class a share of Berkshire Hathaway Inc briefly surpassed one hundred thousand dollars in 2006 Warren Buffett's investment in January finally becomes profitable bouncing back from earlier struggles above his senses that a market is overheated and struggles to find new profitable Investments terrific game that way because you can sit there and wait and wait and wait for the right pitch and and there are not many things in life where you get that option and that's exactly what you're doing now that's that's what I do now I've done it before in anticipation of this annual meeting you have to say to the stockholders I've been waiting for the right pitch and I haven't seen it that's right that's right and and some Pitch somebody else can hit out of the park you know but I don't think I can you know that's my that's my problem but I'm not gonna you know I'm not gonna think I can hit a picture I can't but what he doesn't know is that a cataclysmic economic event is just two years away poised to unleash Financial destruction on a scale that is unheard of right now we're sitting down 875 points we've now broken down ten thousand the Dow Jones industry leverage dropped more than 900 points as the housing crisis deepens washeries one's impregnable Fortress begins to crumble one of the industries most legendary firms suddenly finds itself on the precipice of ruin desperate to restore confidence in the market and fend off financial disaster Goldman Sachs turns to Warren Buffett [Music] you know give us a chance to use that cash sensibly and and this was a five billion dollar opportunity to I think deploy cash sensibly while billing out Goldman Sachs Buffett makes sure he gets a favorable deal from the bank that guarantees him a huge profit once the firm survives the crash he employs the same strategy with a general electric investing three billion dollars in preferred stock that offers unlimited upside and no downside 2008 was one of the best periods of time for Warren Buffett he invested in a lot of trouble companies and even in distressed debts Berkshire Hathaway was so invested that he ran out of cash for the first time ever while the housing crisis of 2008 becomes a thing of the past the American economy has seen a remarkable resurgence with the market experiencing one of the longest periods of prosperity shares of Berkshire Hathaway have soared to incredible Heights but now Buffett has a new problem Warren Buffett has talked in the past or spoken about in the past the difficulties of Berkshire Hathaway becoming so large he says that it's becoming increasingly difficult to find businesses that he can purchase or invest in that will move the needle in a dramatic fashion for Berkshire in 2016 his attention was drawn to an unexpected company Apple a long-standing avoided investment for Buffett Berkshire Hathaway has taken in a one billion dollar stake in apple according to a regulatory filing report released today Berkshire held almost 10 million shares of Apple in its first quarter the company is possibly betting that the tech giant will rebound after a Slowdown in iPhone sales despite his large investments in Behemoth companies like apple Berkshire Hathaway's stock price remaining stagnant if you look at Berkshire Hathaway's stock price for the past 15 years until 2022 it behaved very similarly to the s p 500. for the past five years Buffett has been content to sit on the sight lines and observe the Market's unprecedented boom driven by retail investors and cryptocurrencies but after years of going through Market Cycles Buffett and Monger are convinced that the time will come for the market to fall [Music] bidding a due to 2022 with a big good riddance major average is all officially closing out the year with their worst losses since the financial crisis the NASDAQ down for four straight quarters for the first time since the.